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Shafer proposes 'fair tax' for state

ATLANTA -- For years, a Gwinnett lawmaker has pushed for a national sales tax to replace the federal income tax.

Now, another Gwinnett lawmaker is making the same pitch for the state government.

Sen. David Shafer, the Duluth Republican who is serving as Senate president pro tem, dropped two bills this week that could convert state funding to the consumption tax. The move, he said, could make Georgia more competitive with places like Florida and Tennessee, which do not charge an income tax.

"I've always believed we should tax consumption instead of production," Shafer said, echoing the argument for the federal FairTax, which U.S. Rep. Rob Woodall has advocated since taking over for the original sponsor John Linder after his retirement from Congress.

Along with other members of the Republican leadership, Shafer has proposed two constitutional amendments that could shift the state's tax structure. The first would cap the income tax at its current rate of 6 percent, adding the cap to the Georgia Constitution, while the second would limit any increase in sales tax to off-setting the income tax.

"It would create a pathway for us to move to a fair tax, a consumption tax," Shafer said. "I intend the legislation to begin a conversation."

For an amendment to the constitution to go to voters, it must pass both houses of the General Assembly with two-thirds of the vote.

The income tax cap proposal has been sponsored by every member of the Senate Republican Caucus, which means it has the support of two-thirds of the Senate already.

But since the earliest an amendment could come before voters is November 2014, Shafer said he doesn't expect the proposal to move swiftly through the legislature.

"We'll be building support for these ideas over the next two years," he said.

Comments

NewsReader 1 year, 6 months ago

Great idea Shafer. Only problem is that we live in a time where there are far more consumers than there are producers. As such, don't expect buy in because these consumers don't produce anything now. They won't support a consumption tax because they are already exempt from paying a production tax by virtue of never producing anything.

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agneskravitz 1 year, 6 months ago

Another crackpot idea from a crackpot. You will pay a tax on everything you buy including medical bills. Try having a long and expensive illness. You could end up paying more in taxes than you earn in income. Sweet!

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trooper59 1 year, 6 months ago

I honestly cannot see how the Fair Tax system would not immediately lead to a huge influx of cash-only under-the-table sales. People shop online in droves to avoid 6% sales tax now. I can only imagine how much effort will be put into avoiding a sales tax several times that.

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ConcernedrReader 1 year, 6 months ago

What a totally regressive idea and a backdoor way to further fill the state coffers. How about addressing the cronyism and corruption first and then the taxpayers may even believe that you are doing something positive.

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wade 1 year, 6 months ago

You pay state taxes on medical bills now. The provider's state and federal income taxes are included in the fees.

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CitizenX 1 year, 6 months ago

Seriously agneskravitz? Crackpot idea? At least with the fair tax, everyone would be paying tax and you wouldn't have a state income tax. Where did you come up with medical bills? Last time I checked, I didn't pay sales tax on my emergency room visit. Try researching the fair tax before you shut the door on a new idea.

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FordGalaxy 1 year, 6 months ago

CitizenX - It's been my experience with the fair tax that those who don't understand it immediately label it as "stupid" or "regressive" or "idiotic" because to them, it's much easier to stick with the devil we know that to try and make a change. Also, remember, that most people don't want a tax structure that will force them to pay more, especially when we have an easy target like 'those filthy rich people' who aren't "paying their fair share."

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trooper59 1 year, 6 months ago

The problem with the Fair Tax is that is disproportionately impacts lower incomes. Example:

Citizen A makes $500 and spends $300. Citizen B makes $1000 and spends $300.

Both will pay an equal amount of sales tax. Let's say it's 30% sales tax. After tax Citizen A and B both pay $390, with $90 of that being taxes.

Citizen A has now spent 18% of their paycheck on taxes. Citizen B has now spent 9% of their paycheck on taxes.

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FordGalaxy 1 year, 6 months ago

There are also rebates built into the Fair Tax (at least in the Linder version) that account for the "disproportionate" taxation. Also, I love how every time a tax reform issue comes up, people talk about how it will negatively impact someone lower on the income scale. No one seems to want to mention that many people are lower on the income scale purely through their own choices. Why be responsible for yourself when government can be responsible for you?

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trooper59 1 year, 6 months ago

So we should punish those earning lower incomes because some people in the same income bracket have made poor choices?

If being wealthier was simply a matter of choosing to have more money, I don't think we would see so many people in poverty. I don't think it's wise to assume someone is low income because they have made bad decisions.

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FordGalaxy 1 year, 6 months ago

The counter to your argument, then, is to assume that people in a lower income bracket had no bearing on their own condition, which is something I cannot accept as full gospel. Yes, some people have had bad things happen, that is just a fact of life. Some people, though, have no concept of managing money. They work minimum wage jobs, yet they spend their money on cigarettes, alcohol, lotto tickets, buying things they don't need, etc. You don't just choose to have more or have less, you choose what paths you will follow, what actions you will do, and those shape your economic fortunes as much as anything.


I was born into a poor family, and yet I'm firmly middle-class now. I could've stayed in the situation I was born into. I could've looked for someone else to blame and for someone who would take care of me, but I didn't. I chose to rise above and make something of myself.


But you are right in comparing taxation to punishment. Only, under taxation, you get punished for success.

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LilburnsFuture 1 year, 6 months ago

Can we use the same logic then? Ok, here it goes.

Example:

Citizen A makes $500 and spends $150. Citizen B makes $1000 and spends $300.

Both will pay an equal amount of sales tax, notice I did not say equal amount of tax revenue. Let's say it's 30% sales tax. After tax Citizen A pays $45 and B pays $90 in taxes (notice Citizen B is paying twice the fair share of Citizen A).

Citizen A has now spent 9% of their paycheck on taxes. Citizen B has now spent 9% of their paycheck on taxes. WOW! Wait, they are paying the same percentage in taxes.

What you are refering to is PRICE not income. Let's not get those confused.

Maybe someone making $500 shouldn't buy the same new car make and model as someone making $1000. But this is America! There is no need to stop that citizen from a second part time job to earn enough for a good down payment and getting the car of their dreams.

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trooper59 1 year, 6 months ago

"notice I did not say equal amount of tax revenue"

And that's the problem. When your policy is far more concerned with making the system better for the government than it is for the tax payer, your policy is not going to get support.

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LilburnsFuture 1 year, 6 months ago

Actually, that's the solution. The system is better for the government and it is better for the tax payer. Tax payer B paid twice as much tax revenue as Tax Payer A.

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notblind 1 year, 6 months ago

Any time they propose to alter a tax it's never to the benefit of the actual taxpayer. Case in point is the current vehicle sales tax BS.

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Sandykin 1 year, 6 months ago

True, but I do like the idea in concept: Those that have the money to spend extravagantly, get to pay extravagant taxes on those items - no loopholes to get out of paying their fair share. I like the idea that someone buying a $50,000 car gets to pay the very same tax rate as the person buying a $5,000 car. You want to live in a mansion and play with expensive toys, you pay the tax on them. Those of more modest means will pay an accordingly modest tax amount.

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R 1 year, 6 months ago

That’s an interesting interpretation of the ol fair share viewpoint...

Until the accursed rich purchase, then register the luxury item at their second, third, …. 15th domicile out of state and out of reach.

Didn’t Gephardt pull that back a few years ago?

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Sandykin 1 year, 6 months ago

You honestly think that someone who can afford 15 homes is going to live in a cheap dump and drive a wreck of car here in Georgia just to avoid paying taxes on the luxury items they enjoy? Do you think they're going to drive out of state to dine at an upscale restaurant to avoid paying taxes on dinner? Or not see the show at the Fox or concert at Chastain just to avoid paying the taxes. Something tells me if they have that much money, they're still going to spend it.

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R 1 year, 6 months ago

No I believe they will buy or lease a nice pad to live in and then bring / buy / tag all the other toys from outside the state where they aren't taxed to the extent we are. (As long as we are NOT cheaper than the hauler that is.)

I believe this because there are reams of records and news articles for proof from all over the country.

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Sandykin 1 year, 6 months ago

I'll point out here that people who live in many of the northern states pay 2-3 times as much in property taxes as we do here in Georgia, but you don't see them abandoning their homes and moving here to Georgia in droves to avoid those higher taxes. There are also several states with gas prices quite a bit higher (California and Hawaii for example) than they are here and you don't see any kind of mass exodus out of those states either. People aren't going to leave their job or their family just to avoid a tax based on consumption, especially when it may not even work out to be more than they're paying under the current income based tax.

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kevin 1 year, 6 months ago

We need to wait for the bill to see what is in it. The only thing I like about it is everyone will contribute to the government (especially illegals and drug cartels), even those that pay no income tax but get refunds for doing nothing. It is really a shame that we exempt taxing Seniors only up to only 35,000. Try living comfortable in Georgia on $35,000 or less. (This is before taxes and medical bills. After income, sales, and property taxes, I would guess a senior would take home about $24,000 a year.

A fair tax looks much better or a Federal level. I am not too comfortable with it on a State or Local level. The bill needs to be analyzed before we tax ourselves to death over it. We already pay sales tax stuff we buy. If that rate jumps up, it will be more quicker money in their coffers to spend. The government will take in their tax money "monthly" instead of "annually." They just might spend it all too quickly. It might help the state from having to borrow money during the year though. Look at the bill before jumping to conclusions. Always be wary of a major change. It usually is a sneaky way to collect more money to spend.

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ConcernedrReader 1 year, 6 months ago

The Fair Tax is the biggest misnomer ever devised. Most people have not thought it through. Yes, on the service the thought sounds great but the effects are very regressive and burden the citizens that can least afford. Sure it is good to say that people who now pay little or more taxes will pay more but these are the same people who can't make ends meet now. In the End, it is just a way for the wealthy to off load the burden to middle and lower classes. Now I am not saying that wealthy is a bad thing...contrary, it is a good thing and we all strive to make more but to use that wealth and power to to take advantage of the less fortunate and many examples, the less educated is nothing but pure greed and meanness and solves no problems. I see where Mr. Shafer stands.

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LilburnsFuture 1 year, 6 months ago

If you are against illegal immigration, then it is wise to support this bill. If you believe illegals are not paying their fair share, then you would support this idea. If you believe illegals avoid income taxes, then you should support this bill. If you are against illegal immigration but believe this is not a good idea, then who is really the bigger fool?

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trooper59 1 year, 6 months ago

If you are against illegal immigration, you would be much more concerned with punishing the Americans that hire them than you would be with re-writing the entire tax code in an attempt to tax them.

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LilburnsFuture 1 year, 6 months ago

One page of tax code versus 8000 pages of tax code doesn't seem like much hard work to me in terms of re-writing. I agree! Punish those corporations who hire illegal immigrants. I've yet to see legislation signed by the President that proposes stiffer fines for those hiring illegals. However, I am more concerned with enforcement at our borders and most people would likely agree with me.

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Jan 1 year, 6 months ago

The most unfair tax is a sales tax. Those with less money to spend will pay a higher percentage of their income in taxes. While the wealthy will spend more, they also have more vacations and business trips out of state. We already have buses taking people on shopping trips. If this passes, these shopping trips to out of state shops will increase so people can avoid the extra taxation. That will hurt Georgia's economy. I have investigated the proposal of Linder and find the math just doesn't work. It is a stupid idea. Woodal must recognize that because he avoids discussion of the plan except when he wants to get his blind followers to vote for him at election time.

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LilburnsFuture 1 year, 6 months ago

Under the Fair Tax those with less money will recieve a rebate on those higher taxes they are paying. So, that burden you are refering to, does not actually exist. Never fails to me that those who do not like Linder, tend to omit the rebate so they can demagogue it.

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trooper59 1 year, 6 months ago

Unless I've been wrongly informed, the rebate only applies up to the poverty level. The rebate does nothing to address the fact that those in the middle class have a much larger effective tax rate than the upper class.

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LilburnsFuture 1 year, 6 months ago

So, now you don't care about the poor? You don't want the rebate to go to those in the povery level? Is it because it doesn't help the middle class? That's cold.

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Jan 1 year, 6 months ago

In previous posts, I have addressed the rebate. All this accomplishes is shifts the increased tax burden to more middle class families. This will still mean the wealthy will pay less tax and the and those not wealthy will pay more. That is why the wealthy have put so much money into convincing you that it is a good deal.

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LilburnsFuture 1 year, 6 months ago

This will mean the wealthy will pay less tax and those not wealthy will pay more. Isn't that happening already? The rich already have their tax breaks based on whatever the current party wants? Want tax breaks on putting solar cells on your house? Bam. There are two points behind the Fair Tax, it is to put everyone into the tax game and it makes it harder for politicians to cater the tax code to their special interests. But some people cannot see the forest from the trees - though I'm sure they can tell you how old and what type tree they are in front of. For some people who support change, I find it so interesting so many are not interested in changing.

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R 1 year, 6 months ago

The rebate is at the national level, not here at the state level.

Actually every time a local official deploys the phase "Fair Tax" like this, it makes the national overhaul that much harder from what I've read thus far.

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FordGalaxy 1 year, 6 months ago

With income tax, you're taxing what a person makes, which is great, until you realize just how many people make versus how many people consume. A consumption tax at least puts everyone in the game to pay for services they use. The liberal mantra of late seems to be that we have a revenue problem instead of a spending problem. What better way to make up revenue than by taxing every single person, legal or illegal?


The current, progressive income tax that we have doesn't exactly shake out "fair" as liberals seem to want. The evil Top 1% in 2008 made about 18% of all income earned, yet they paid 38% of all income taxes. That same year, the bottom 50% of wage earners paid only 2.7% of all income taxes. What is fair about that?

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jack 1 year, 6 months ago

Can't help but notice how some folks complaining about the regressive nature of a consumption tax have no qualms about voting for SPLOST upon SPLOST.

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Jan 1 year, 6 months ago

I have consistently voted against every one of them. Though they have passed, none have passed by a large margin and some have failed.

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NewsReader 1 year, 6 months ago

Yeah, I kinda caught on to that too Jack. The liberal mind can be summed up in three words; irresponsibility, entitlement, and hypocrisy!

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ConcernedrReader 1 year, 6 months ago

The Fair Tax Politicians are the same goons that will soon rob hard working Americans of their Social Security while gaining big fat pensions. Politicians should not be eligible for Pensions as they serve for the people. When did Washington DC become so entitled. What do Federal Workers' generous Pensions remain untouched while the Politicians look to raid the public coffers. Except for military soldiers that served on front lines in combat for an extended period get 60% of pay for life? I think that many other areas need addressing before you look at SS.

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